What’s Up With Those ATM Fees?

We get the scoop on the Cashola machines you see all over Cabo

BY: BEN DOVER

Last month, one of our loyal readers sent us a picture of an ATM receipt. The reader was unhappy with the high fees he was charged when using an Intercam Cashola ATM to withdraw US dollars. The receipt showed a "compensation for the fluctuating exchange rate" fee that amounted to a whopping $27.80 USD. The reader said he agreed to one ATM fee of $6.95, but not this second fee, which was an unhappy surprise.

We reached out to Cashola and get some answers. We interviewed Cristina Gonzalez, the CEO of Cashola, who is based in Mexico City. (Note: this interview has been translated from Spanish and edited for clarity.)

GG: Who exactly are you guys?

Gonzalez: Cashola is a company that provides ATM services on behalf of chartered Mexican banks. (Editor’s note: A charter means the bank complies with banking regulations.) We are currently partnered with both CiBanco and Banco Intercam. We are highly regulated, and follow all rules and regulations imposed by various networks, such as Visa and Mastercard, as well as the Mexican Banking Commission.

GG: Why the high fees?

Gonzalez: We operate both US dollar and peso dispensing ATMs. Our peso ATMs charge a “normal” fee, similar to what one would encounter in the US. The US dollar ATMs charge a higher fee due to the costs associated with dispensing US dollars in a foreign country.

GG: Why would you dispense US dollars in Mexico?

Gonzalez: We only dispense US dollars in the tourist regions, and we do so because we discovered, early on, that many international tourists will not use our peso ATMs. There are likely many reasons, such as confusion over converting foreign exchange, or cruise ship passengers not wanting to be stuck with pesos once they get back on the boat. As virtually all businesses in Mexican tourist destinations accept dollars, using dollars is an easier solution for many.

GG: So, about those fees…

Gonzalez: Dispensing US dollars in Mexico is a challenge. We pay a fee to our networks based on a percentage of the cash dispensed, similar to how retail businesses pay a percentage to Visa or MasterCard on credit card transactions. Additionally, we pay fees to acquire US currency, and we often have to ship it in from major currency centers on the mainland. Also, we are settled in pesos, so we have to pay an exchange fee to re-purchase the dollars. As well, we have other unique costs in the tourist areas, such as higher insurance and armored car fees. Unlike regular banks that operate off-premise ATMs as a “loss-leader” in order to attract retail customers, we need to charge a fee to ensure that all of these costs are covered.

GG: But 6.95 percent plus the surcharge? Yikes!

Gonzalez: That’s the cost of dispensing US dollars with a reasonable profit factored in. In fact, our competitors charge between 10 to 13 percent, so we believe we are fairly positioned. One mitigating factor is that when a customer withdraws dollars from their US dollar account, they are not paying the approximately 5 percent foreign exchange markup that their home bank charges when a peso withdrawal is converted back into dollars.

GG: Our reader complained that one of the fees was not disclosed.

Gonzalez: That’s incorrect. All fees are fully disclosed on separate screens that must be individually agreed to by the customer prior to the completion of the transaction. We operate a toll-free line with an English-speaking operator who is able to assist customers who have any problems or concerns with the ATM. In rare and extenuating situations, we have provided a partial refund of fees. It might sound cliché, but we are all about customer service.

GG: Off topic, but what about cloning (skimming data from ATM cards)?

Gonzalez: Cloning is an international scourge, and it is something we actively defend against. All of our ATMs are physically inspected on a daily basis. Additionally, we employ security software and hardware specifically designed to protect against cloning attempts. At far greater risk are the thousands of small credit card terminals found in retail businesses. Those units are rarely ever inspected. Once the USA finally coverts 100 percent to cards that use chips, as Mexico did in 2012, and the magnetic stripe on cards is removed, the threat of cloning will be vastly reduced. However, until then, we remain extremely vigilant.